FCC Broadband Connections Data Show Competitive Market Still Growing

The FCC recently released its latest broadband connections data. The data show continuing fixed broadband adoption at the end of 2011, with growth of 3.8 million fixed connections from 2010 to 2011 for a total of 88.3 million total connections. Of these 80.7 were residential connections, and residential connections represented almost all of the fixed line growth. These data are a little over a year old, so the trends largely reflect what we already knew. The FCC data do, however, provide more granular data by type of technology and they break out residential data from business data. Below are a few more highlights from the report.

Speed Increasing

Average residential speeds increased. The portion of consumers with residential fixed connections meeting the FCC’s 3 mbps / 768 kbps broadband definition continued to rise, from about 55 percent in 2010 to 59 percent in 2011.

It’s important to distinguish adoption from availability. According to the national broadband map, fixed line broadband at these speeds was available to 93 percent of the population at year-end 2011.

The same can be said for fixed broadband adoption at any speed. While approximately 70 percent of the population has adopted fixed broadband, it was available to approximately 96 percent of the population at the end of 2011.

Fixed v. Mobile

Fixed broadband grew at a 4 percent per year rate, adding 3.8 million connections.

Fixed residential broadband connections grew at a 5 percent per year rate.

Mobile residential broadband grew at a 46 percent per year rate.

Thus, nearly all of fixed broadband growth came from residential connections; mobile broadband growth came from both business and residential connections.

Regardless, fixed and mobile connections—business or residential—do not make for a good comparison because fixed broadband connections are purchased at the building unit level while mobile broadband connections are purchased at the individual level. Or at least this was the case in 2011, before the introduction of shared data plans, which will complicate future analyses.

Moreover, while these data show a slight decline in fixed broadband connections for businesses, they do not capture all modes of business broadband connections, e.g., private lines. Therefore, it is not possible to comprehensively understand the business broadband market dynamics from these data, including shifts to non-captured services.

Finally, while the FCC reports mobile broadband connections at the residential level, it is impossible to know how many of these represent household-level mobile broadband substitution. Thus depending on the number of households, fixed broadband penetration would be in the high 60 percent range, just under 70 percent. This is a couple percentage points lower than suggested by the NTIA / Census Current Population Survey, which indicate 68 percent penetration at end of 2010. We do not know if the difference is, in part, mobile broadband substitution or whether it is merely a measurement issue.

Telco v. Cable

At the end of 2011, cable had 54.6 percent of total fixed connections, compared to 43.2 percent for telcos and 2.1 percent for other, such as satellite and fixed wireless.

The numbers are similar for residential connections: at the end of 2011, cable had 56.8 percent of residential fixed connections, compared to 41.4 percent for telcos and 1.9 percent for other. By comparison, at year-end 2010, cable had 56.3 percent of residential fixed connections, and telcos had 42.0 percent. Telco market share fell because cable took a larger share of net additions in 2011, 66.7 percent compared to 28.6 percent for telcos and 4.8 percent for others.

Thus, telcos grew total fixed connections and lost less than one percentage point of share from 2010 to 2011. At more than 40 percent telco share, claims that cable has “won” and the market is, or will be, a cable “monopoly” warranting government intervention are off the mark. They are even more off the mark when considering recent telco announcements regarding upgrades to fixed broadband networks and the potential for fourth generation wireless to provide competitive services to the mass market.

Telco DSL v. Fiber

From 2010 to 2011, telcos added 1.1 million residential lines, consisting of 300k DSL lines and 800k fiber-to-the-home lines (services that use fiber to a remote terminal, the curb, or the neighborhood, but use DSL for the last stretch to the home are classified as DSL in the FCC’s data). Based on initial reports, it is possible that in 2012 DSL lines declined as there was a more pronounced shift to fiber. In fact, a recent paper by the Information Technology and Innovation Foundation states that telco fiber services added more subscribers than cable in the third quarter of 2012.

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